Initial Jobless Claims Fall for First Time Since April
By Jason Lange
The number of Americans lining up for new jobless benefits fell last week for the first time since April, a hint that a slowdown in hiring last month may only be temporary.
The data on state unemployment claims, released by the Labor Department on Thursday, takes some of the edge off a report last week that showed a sharp slowdown in job creation in May.
Many economists believe mild weather in the winter led employers to hire more workers at the expense of spring, but that the weather effect should be temporary. Some economists suggested the claims data backed that view.
"[It] gives us more confidence that the trend in payrolls is stronger than the May payroll data implied," UBS said in a note to clients.
Four consecutive months of slowing job creation have fueled speculation the U.S. central bank would ramp up efforts to prop up the economy.
However on Thursday Fed Chairman Ben Bernanke, speaking in congressional testimony, offered few hints that further monetary stimulus was imminent, even though he said the U.S. central bank was ready to shield the economy if financial troubles mount.
The Labor Department said initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 377,000. That was spot on the median forecast in a Reuters poll.
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"The fact that the number didn't back up is a strong sign that the economy is holding in," said Carl Riccadonna, an economist at Deutsche Bank in New York.
Prior to last week, claims had risen in four consecutive weeks, adding to concerns over several months of lackluster hiring data. While the country emerged from a deep recession three years ago, the jobless rate was 8.2 percent in May, well above its long-term historical average.
Still, most of the recent increases in new jobless claims were marginal and the overall level of claims has held at levels consistent with a modest recovery in the labor market.
"I think the Fed looks at it and certainly leaves the door open for further action but it is not a ringing bell that it should take action right now," said Peter Jankovskis, an investment officer at Oakbrook Investments in Lisle, Ill.
U.S. stock prices pared gains following Bernanke's comments, but remained higher after the Chinese central bank cut bank lending and deposit rates, fueling hopes of coordinated international action to aid a fragile global economy.
The last time claims fell was in the week that ended April 28. The four-week moving average for new claims, a measure of labor market trends, increased 1,750 last week to 377,750.
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The Labor Department last week said job growth slowed in May for the fourth straight month, heightening concerns that the deepening debt crisis in Europe and a slowdown in China were starting to dampen an already lackluster U.S. recovery.
Concerns over the course of U.S. fiscal policy may also be weighing.
A Labor Department official said no states estimated their data for last week.
The report showed the number of people still receiving benefits under regular state programs after an initial week of aid rose 34,000 to 3.29 million in the week ended May 26.
The number of Americans on emergency unemployment benefits fell 45,808 to 2.57 million in the week ended May 19, the latest week for which data is available.
The number of people on extended benefits slipped 58,829 to 253,605. Most states that were eligible for the extended benefits program following the 2007-09 recession lost that eligibility this year as their labor markets improved or stabilized.
That could artificially push down the unemployment rate later this year if people dropping off the benefits rolls give up the hunt for work.
A total of 5.97 million people were claiming unemployment benefits during the week ending May 19 under all programs, down 167,133 from the prior week.
